Posts Tagged ‘Put option’

Hi all,

For a while I was trying to fight the trend. This is a mistake. Although sometimes swimming against the flow can be profitable most of the time it is just difficult.

That’s why when the market direction is up, there is no point to go short. But… it is not a secret that since March bottom the market was going in one direction with very few corrections. Many people will say that a big correction is due to come and September is a bad month anyway!

They may be right and we may see a change of direction but until that happen, I would not recommend to open a short position. But you can do what I’ve done: Bought some shares that I believe their trend is up but back-up it with a put option for October. You can still find them cheap so for 40-50 points you can have a back-up if something will change.

I myself bought FTSE 4500 put for October a bit expensive at 86 points, but still I am happy with this insurance.

On the last article Simon Grifin from Share magazine has recommended to sell the FTSE 100 at 3950. He called the latest rally as typical bear rally or in other words false rally. By the time I was reading his article the FTSE 100 was around 4100 and the Dax was 4650. Then came Friday and markets continue to move up around 0.5%

All of these put my Dax 4000 Put for May call value on the lowest you can imagine (6 points when I bought it for 36). This wasn’t good. I was speaking with my friend that holds the same positions and both of us agreed that the market is almost on its peak and the only way is down.

So we checked to buy the Dax 4400 Put for May. The price was 66 around 17:00. I though that if the Dow will finish on high note then the option will be worth 60 or less and I will buy it. But I forgot to check. You know Friday evening is not the best time to deal.

Anyway it touched 62 and the weekend has started. A new week and the markets again see red. The Dax lost 190 points in one day. This means two things:

1) My 4000 Put worth 34 now (300% in one day)

2) 4400 put that I didn’t buy worth around 125 (100% in one day)

All I can do is blame myself. I knew that the market will go down but combination of tiredness and fear of losing more prevented me to take a huge profit. Another painful lesson has been learned.

Hello all,

I have bought today a put option on the Dax. Why the Dax? The FTSE 100 didn’t jump as high as the German one or the Dow. While the Dow jumped from 6500 to 8000, and the Dax from 3600 to 4500, the FTSE was much more solid and jumped from 3500 to 4000.

So if I am right and the market will change direction, my logic says that the FTSE will slide slower than the other two. So I left with 2 options. The Dow options seem to me expensive so I’ve decided to choose the German index.

Bought it for 36.3. The lowest price today was 30 but I missed the bottom. I guess you can’t catch the bottom. So I have 4.5 weeks and my target is to double the money. I will keep you updated.

Hi all!

I am not that impressed with the last rally. It is nice to see the market changing direction, but I don’t think that this is the end of the bad period. But I do think that the rally will continue for one or two days depends on the Goldman Sachs results tomorrow. If I am right then I will buy a put option on the FTSE 100 and maybe on the Dow Jones as well.

So I am looking to buy the PUT 3750 for May. I think by Tuesday it should be cheap enough. The nice thing about options is that you know how much you can loss. In fact every time that I buy one I consider it as ‘lost money’ and I am always looking to double my investment. Sometimes it works, sometimes not, but I have more than 50% success which is enough

Yesterday I recommended to take the 4100 PUT option Feb 09 on the FTSE. The price was 59. Now it is 93 and it was during the day 141! those who took my advice had a nice profit and it could be more.

Did I take it? no. No? no. Why? because… it was late I was tired and god knows why.

Instead this morning I bought a 7740 CALL option on the DOW at 42. I though the DOW was way too down in the pre-hour market and I hoped it will bounced back. So I bought it when it was 7680. Now (19:30) hour an half before closing time my option worth nothing.

That’s ok sometime you lose sometimes you win. But my mistake was not to hedge my position. On that time I could buy the 7640 PUT at 55. Now it worth much more and it would cover my losses from the CALL. It is true that when you hedge your position you limit your profits but it is better to have little profits than big losses.

In the bottom line it is all depends what you are looking for. For me if I can make 10%-15% on each trade I am happy. For some they are looking for much more. But then when they lose they lose more.

For the ones that followed my advice from yesterday and bought the 4100 put Feb-09 on the FTSE can take nice profit of 25% in less than 12 hours.

The FTSE starts the day on the red and now the option worth 74, 15 points more than yesterday night – 25% profit.

Hi all,

if you believe that by the end of the week the FTSE 100 will head to the 4000 direction (which I do) this is the time for you to but the 4100 put of Feb-09 which expired on the 20/02 10:00.

At the moment the price is 59 while the FTSE stands on 4134. Another red day tomorrow and the option will worth much more. You can easily make 20%-30% with low risk.

For example in the morning when the FTSE was higher the price was 46 in the evening when the FTSE went down the price of this option jumped to 59. 28% in less than a day.

Hi all,

To be honest I thought that Wall st will react better to the new president. I thought that Mr Obama will come with a great speech that will carry Wall st with great optimism all the way up. I was wrong.

When Barak Obama made his speech, the Dow was around 8150 soon after it went down to 8100 and then all the way down to 7950. Great start. So if Obama didn’t understand the task in front of him now he does.

But with banking sector near collapse some analysts talk about the Dow around 6000 and the FTSE has 2 at the beginning. My advice is calculate your risk. If you still want to go long on the market buy put option. Just in case. But put options are expensive these days because no one can see good news in the near feature.

I know that I am willing to take a risk and going to buy Barclays if they touches 65p. At the moment it is 72.95 so I am not far. But this is for long term investment. I think they are one of the few that have a chance to get it through, and if they do, the sky is the limit for this share.